What is the best type of mortgage if I only plan to stay in the house for 4 years?

Question

My job is transfering me to a temporary postion that will only last 3 to 4 years max. What type of mortgage should I get to get the lowest monthly payment since I know I will be selling in 3 or 4 years?

Answer 1

I would investigate a couple of options. An interest only loan will proivide you the best cash flow. A 5/1 ARM would provide a lower rate for you and some 5/1 ARM's are assumable which could be a great marketing device when you go to sell.

Answer 2

I will go against the grain....against all the so called brokers, specialists, planners, consultants, etc, etc. (NO disrespect to any one)

First of all you are saying that your job will give you a temp position that will last max 3-4 yrs. What will happen if your company decides to leave for 2 more yrs. nobody knows what will happen in the future. So, for this reason I suggest you get a 7 or even better a 10ry ARM. A 5yr ARM only leaves you 1 yr between the time your temp period ends and the time you will either have to sell or refinance.

You are also looking for the lowest monthly payment, so I would suggest getting an 10yr ARM with Interest only BUT make sure you make extra payments to the principal whenever possible, preferably every month. This way you build equity little by little and when you finally sell 3-4-5 yrs from now you will have equity to rely upon to pay for all the selling costs (closing, commissions, etc). I would not advice you to just hope your property will appreciate to gain equity because nobody can tell you what exactly will happen in the real estate market. Better safe than sorry and build equity by making extra payments.

A 40yr fixed might be a good idea to lower monthly payments but I dont 100% agree with it for the simple reason that you gain equity even slower than you do with a 30yr fixed. It's not a bad idea but I'm a little defensive about it. This includes the 40yr fixed interest only as well.

I DEFINITELY would not suggest you get the OPTION arm because this loan has negative amortization and instead of building equity you are loosing it and as I mentioned before you will need it to cover the costs when you sell.

Last but not least I would like to tell you NOT to take ANY of these messages very seriously INCLUDING mine because since we know nothing about your financial situation, your down payment amount, credit, etc, etc and many other variables, we really cant give you a more specific answer. Only generalized answers. Anyone else that tells you different does not know what they are doing.

Hope this answers your question, good luck

Answer 3

If you can get a good enough deal on the house or can be sure that the value of the house will remain stable or increase, if you get one of those interest only loans. Your payment will be very low, but you won't be building equity. If you don't care, then don't worry about it. Just make sure that since you won't be putting any $$ towards the actual amount you owe on the house, that you will be able to sell the house for what you owe on it in 3-4 years. (Which as a rule, homes appreciate, so you should be able to as long as you don't get ripped off on the house)

My next suggestion would be an ARM. You will start out with a low interest rate for like 3-4 years. It will go up after that, but if you will be selling it, then you won't care.

Good luck!

Answer 4

I would suggest a interest only mortgage for a 5 yr period, when you sell, you pay off the mortgage, and with property values climbing in areas, you would still walk away with money in pocket, and your payment is lower on a interest only loan.

Other Options are:

adjustable loans, option arms (where you pick the payment, from 4 payments, including interest only). Interest only are lower payments, but nothing is being paid on your home. Some self-employed ppl like the payment options, in a lean month when money is tight., they can pay a lesser amount.

Also when you are ready, talk with a broker, a broker underwrites for many company's (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a "hard" pull and it drags down your credit score

When a Broker takes an application, (that is called the 1003), you will get a Good Faith Estimate and Truth in Lending from them with in 3 business days, that is the RESPA law (at least it is here in Indiana)...The GFE (Good Fair Estimate) will tell you your fees etc.....I have see rates higher than 8.99 for poor credit - if you need 100 percent at a fixed rate (it would be 9.50 or highter) this just gives you an Idea......If you need help, check out my web site, and Good Luck to you - A Broker, who cares, will go over it all with you and be in contact with you daily. The one on one customer service is important, to you, the client, to let you know the whole loan process.

Answer 5

if you plan on selling in three years and you want the lowest payment than you should look into what is called a 5/1 intrest only loan. considering the going rate at banks right now is lower than the 3/1 intrest only. this will give you five years fixed with the lowest payment. keep in mind you will not be paying any principal so you will owe the same amont you borrowed when you are ready to sell. hope your area has grow left in it or you may be stuck not making to much

Answer 6

Your not going to build much equity in that time frame, so I would suggest going with an Interest Only (I/O) product.

You could go with an Option ARM, but make sure you know how to use it to your best advantage. It's easy to get yourself in a pickle with this type of loan if you aren't properly educated on it's usage. It has four payment options for you every month, one being an I/O option.

Talk with a competent mortgage planner about your situation to find and decide which programs out there are best for your needs.

Answer 7

there is not any reason to get an arm at present. charges are merely about same between ARM's and glued plus if for some reason you settle on to stay contained in the abode, you do not ought to stress about getting hit with cost will enhance. I continually pontificate protection at the same time as getting a private loan. I do various lending in Texas and the marketplace there in a large number of places is nice. maximum of Texas did not get stuck up contained in the loopy housing inflation of many different states. it really is what i'd seem into doing. i'm a huge FHA fan because of the low charges and a lot less puzzling underwriting than conventional loans. you could lend as a lot as 97% of the appraised value for a cost/time period refi and 95% for a money out in case you pick money for the upkeep. also, FHA does not have prepayment consequences. solid success!

Answer 8

Why not just rent for that short amount of time and save the hassle of repairs and maintenence? In some areas, it is cheaper right now to rent than to buy, even with an 'exotic loan' when you calculate the cost of upkeep (you never know what repairs might crop up in the next 3-4 years, it could run you in the 10's of thousands!), and since you know you won't be building equity renting may be the smartest choice.

Get into a nice condo with a swimming pool and gym and enjoy the next few years without the hassle of owning! :o)

Answer 9

Generally speaking, for the lowest possible payment, look for the longest loan term and the lowest interest rate combination. There are software programs that will do the calculations for you so you can compare all the options side by side.

Answer 10

7 Year balloon actually had a more atractive rate than some of the arms. You can go either way. I would suggest paying some princiapal so you can have some equity when you sell otherwise by the time you pay a realtor to sell your home you may have to pay money out of your pocket to sell your home. Good luck.